Effective
November 12, 2009, the secured promissory note dated September 11,
2009, among deCODE genetics, Inc. (deCODE), MediChem Life Sciences, Inc.,
deCODE Biostructures, Inc. and Saga Investments LLC, as amended on September 25,
2009, October 1, 2009, October 9, 2009, October 15, 2009, October 21,
2009, October 26, 2009 and November 3, 2009 (the Bridge Note) was
further amended to increase the principal amount thereof to $5,424,000 and the
maturity date was extended to November 15, 2009.

Asset
Purchase Agreement with Beryllium, LLC

On
November 13, 2009, deCODE and its subsidiary MediChem Life Sciences, Inc.
(MediChem) entered into a stock purchase and sale agreement (the Stock
Purchase Agreement) with Beryllium, LLC (Beryllium) pursuant to which
MediChem sold all of the outstanding capital stock of its subsidiaries Emerald
Biostructures, Inc. (formerly, deCODE Biostructures, Inc.) and
Emerald BioSystems, Inc (together, the Companies) to Beryllium and deCODE
guaranteed MediChems obligations under the Stock Purchase Agreement. The purchase price for such capital stock
consisted of an initial payment of $3,000,000 and a potential earn-out payment
of the amount by which the Companies EBITDA for the one year period ending December 31,
2010 exceeds $3,054,000, up to $1,000,000.
The Stock Purchase Agreement contains customary covenants and
indemnification obligations of MediChem as to which deCODE is a guarantor.

The
consideration paid at the closing under the Stock Purchase Agreement was
applied to amounts due to creditors of the Companies, including amounts
outstanding under the Bridge Note.

DIP Loan Agreement

On November 16, 2009 deCODE entered into a
debtor-in-possession loan agreement (the DIP Loan Agreement) with Saga
Investments, LLC (Saga). The DIP Loan
Agreement contains Sagas commitment to make a loan (the DIP Loan) to deCODE
in an aggregate amount not to exceed (i) $3,600,000 prior to the entry of
a final borrowing order by the Court (as defined in Item 1.03 below) and (ii) $11,117,928 less any amount previously advanced under the
DIP Loan Agreement after the entry of a final borrowing order by the Court,
provided that the Court authorizes the application of the proceeds of the DIP
Loan to the repayment of obligations outstanding under the Bridge Note. Sagas commitment to extend credit under the
DIP Loan Agreement is subject to the satisfaction of certain conditions,
including Court approval, and will expire (i) on November 23, 2009 if
the Court does not enter an interim borrowing order on or before that date and (ii) on
December 6, 2009 if the Court does not enter a final borrowing order on or
before that date.

The
DIP Loan will be guaranteed by each of deCODEs existing and future direct and
indirect subsidiaries (the Guarantors), each of which will execute and
deliver a guaranty of the DIP Loan to Saga. To secure their obligations under
the Note and such guaranties, deCODE and

2

each
of the Guarantors will execute and deliver to Saga a security agreement pursuant
to which it will grant Saga a security interest in all of its personal
property, tangible and intangible, now owned and later acquired, including
capital stock in subsidiaries.

The
DIP Loan will bear interest at the rate of 8% per annum and will be payable on
the earlier of (i) January 15, 2010 and (ii) the date of any
sale, transfer or other disposition of all or substantially all of deCODEs
assets or stock. deCODE may repay the
DIP Loan, in whole or in part, at any time but amounts repaid may not be
re-borrowed. The proceeds of the DIP Loan will be used, among other things, to
provide ongoing working capital for deCODE during the Chapter 11 Case (as
defined in Item 1.03 below) and to provide for other general corporate purposes
of deCODE, in each case in accordance with a budget approved by Saga.

The
DIP Loan Agreement contains customary representations and warranties and
affirmative and negative covenants of deCODE.

The
description of the DIP Loan Agreement and the related security agreement set
forth above is qualified in all respects by reference to the provisions of the
DIP Loan Agreement and the security agreement, which are filed as exhibits
hereto and incorporated by reference herein.

Asset
Purchase Agreement with Saga Investments, LLC

On
November 16, 2009 deCODE entered into an Asset Purchase Agreement (the Purchase
Agreement) with Saga pursuant to which Saga agreed to purchase from deCODE (1) all
of the equity interests of deCODE in deCODEs Icelandic subsidiary, Islensk
erfdagreining ehf (Iceland Sub) and (2) all intellectual property rights
and other tangible and intangible assets of deCODE related to (i) the
business conducted by Iceland Sub or (ii) deCODEs drug compounds
historically designated as DG041, DG051 and DG071. Pursuant to the Purchase Agreement the
consideration payable by Saga for such equity interests and assets will be the
sum of (A) cash consideration in an amount equal to the greater of (a) $11,000,000
minus amounts outstanding under the DIP Loan Agreement and the Bridge Note (the
Base Cash Price) and (b) $3,000,000, (B) additional cash
consideration equal to 25% of the net cash proceeds from the sale, license, or
other monetization of DG041, DG051, and DG071 received within 24 months after
the date of the closing minus $3 million, and (C) a non-voting junior
convertible preferred membership interest in Saga, representing a fully-diluted
ownership interest of approximately 15% of Saga.

The
Purchase Agreement contains customary representations and warranties, covenants
and indemnification obligations of deCODE and provides for deCODE to pay a
break-up fee of 3.5% of the Base Cash Price plus reimbursement of all of the
reasonable and documented expenses of Saga and its members related to deCODEs
Chapter 11 case up to the amount of $500,000 if deCODE determines to sell or
otherwise dispose of its assets other than to Saga pursuant to the Purchase
Agreement.

Consummation
of the transactions contemplated by the Purchase Agreement is subject to a
number of conditions, including approval of the Court.

The
description of the Purchase Agreement set forth above is qualified in all
respects by reference to the provisions of the Purchase Agreement, which is
filed as an exhibit hereto and incorporated by reference herein.

The
representations and warranties of each party set forth in the Asset Purchase
Agreement, the Security Agreement and the DIP Loan Agreement (the Agreements)
have been made solely for the benefit of the other party to the
Agreements. In addition, such
representations and warranties (a) have been qualified by confidential
disclosures made to the other party in connection with the Agreements, (b) are
subject to materiality qualifications contained in the Agreements which may
differ from what may be viewed as material by investors, (c) were made
only as of the date of the Agreements or such other date as is specified in the
Agreements, and (d) may have been included in the Agreements for the
purpose of allocating risk between deCODE and Saga rather than establishing
matters as facts. Accordingly, the
Agreements are included with this filing only to provide investors with
information regarding the terms of the Agreements, and not to provide investors
with any other factual information regarding the parties or their respective
businesses. The Agreements should not be
read alone, but should instead be read in conjunction with the other
information regarding deCODE in the Forms 10-K, Forms 10-Q and other documents
that deCODE files with the Securities and Exchange Commission (SEC).

Item 1.03.
Bankruptcy or Receivership.

On
November 16, 2009, deCODE filed a voluntary petition under Chapter 11 of
the United States Bankruptcy Code (the Chapter 11 Case) in the United States
Bankruptcy Court for the District of Delaware (the Court). deCODE
is continuing to operate its business and manage its properties as a debtor-in-possession
pursuant to Sections 1107 and 1108 of the Bankruptcy Code.

A copy of the press release announcing the filing of the petition and
the DIP Loan Agreement and Purchase Agreement is furnished as Exhibit 99.1
to this Current Report on Form 8-K.

Item 2.03. Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant.

The information regarding the Amendment of Note and the DIP Loan
Agreement set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.

Item
2.04. Triggering Events That Accelerate
or Increase a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement.

The
filing of the Chapter 11 Case described in Item 1.03 above constituted an Event
of Default under the indentures pursuant to which deCODEs 3.5% Senior
Convertible Notes due April 15, 2011 (the Notes) were issued. As a result of this Event of Default, all
outstanding principal and interest under the Notes became automatically and
immediately due and payable. deCODE believes that any efforts to enforce
the payment obligations under the Notes are stayed as a result of the filing of
the Chapter 11 Case. The amount of principal and interest currently outstanding
with respect to the Notes, which is material to deCODE, is approximately
$234,700,000.

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Item 9.01. Financial
Statements and Exhibits.

(d)

Exhibits

2.1

Asset
Purchase dated as of November 16, 2009 by and between deCODE
genetics, Inc. and Saga Investments, LLC

10.1

Debtor-In-Possession
Loan Agreement dated as of November 16, 2009 by and between deCODE
genetics, Inc. and Saga Investments, LLC

10.2.

Debtor-In-Possession
Security Agreement dated as of November 16, 2009 by and among deCODE
genetics, Inc. and Saga Investments, LLC

99.1

Press
Release issued November 17, 2009

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.